Question 1

SECTION A - CASE 2: GREENYIELD AGRI-COOP

GreenYield Agri-Coop is a large agricultural cooperative. You are the audit senior for the year ended 30 September 20X5.

During the audit, you note the following:
1. A severe, unprecedented drought during the summer of 20X5 has decimated crop yields, raising significant going concern issues.
2. On 15 November 20X5, a major customer of GreenYield, who owed $1.2m at the year-end, declared bankruptcy due to a fraud discovered in October 20X5.
3. Management has prepared cash flow forecasts for 12 months from the date of approval of the financial statements, showing a severe cash shortage unless a bank loan is renegotiated.
4. Management refuses to provide a written representation confirming their assessment of the cooperative's ability to continue as a going concern.

Question:
If a 'Material Uncertainty Related to Going Concern' section is included in the auditor's report, where should it be positioned according to ISA 700 (Revised)?

Accepted Answer

Memorize the standard structure of the revised audit report: 1. Opinion, 2. Basis for Opinion, 3. Material Uncertainty Related to Going Concern (if applicable), 4. Key Audit Matters (if applicable).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Placing it at the end of the report (old reporting style) or confusing it with the placement of an Emphasis of Matter paragraph.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA AA — Audit and Assurance Practice Exam 5

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